Loose Ends Remain in Nineteenth Century Club Case

By Bill Dries

The still-tentative deal to prevent the demolition of the Nineteenth Century Club building in Midtown has a crucial deadline on Oct. 15 and lots of loose ends before then that involve money and timing.

(Daily News File/Lance Murphey)

Oct. 15 is when $40,000 in earnest money from Nashville businessman Dave Wachtel is due to Union Group LLC.

Union Group is the Memphis company that bought the mansion on Union Avenue from the Nineteenth Century Club, with plans to demolish the mansion and build a retail center including an Asian restaurant on the land. Wachtel and his investors would buy the mansion in a second deal from Union Group and agree not to demolish the mansion.

But as the deal takes shape, there is approximately $500,000 in proceeds from the first sale that remain frozen. Most of the money Union Group paid the Nineteenth Century Club was then donated to the Children’s Museum of Memphis, which has plans to use it for a new exhibit. The museum had already spent about $50,000 toward the new exhibit and was due to make another $10,000 payment on Tuesday, Oct. 1.

In Shelby County Chancery Court, attorneys Steve Mulroy and Webb Brewer, who represent the plaintiffs contesting the original sale who want to stop demolition, agreed to letting the museum make the payment. But attorney John Philip, representing Union Group, said his clients had a problem with doing that before the sale to Wachtel is a done deal.

The bond the plaintiffs had to post remains in place for now. But Evans said if the case is delayed past the Oct. 16 hearing, the bond will be “substantially more.”

After the hearing, Mulroy was confident the deal to keep the mansion intact will be made by Oct. 15.

“I feel good about it. (Wachtel) said it is very likely he will go through with this deal. If he puts the $40,000 down in earnest money, he’s not going to walk away,” Mulroy said. “That’s not refundable. So I think there is a very good chance that we will see the deal go through.”

Evans was wary.

“The court is well-aware that even where earnest money is put up, deals still don’t go through for many and sundry reasons,” he said from the bench, before telling all sides that he will see them the day after the down payment is due.

“We’re very hopeful. But we mainly want to see the Children’s Museum have access to their funds. We did what we felt was a good thing in giving up our building.”

– Lynn Heathcott,Nineteenth Century Club president

If Wachtel makes the down payment this month, he would close on the deal later, probably in December, using financing driven by a combination of historic tax credits and a facade easement agreement with the preservation group Memphis Heritage Inc.

Both parts of the financing hinge on Wachtel and his investors leaving the mansion intact.

Evans questioned closely how that would work. The easement was last used on several Memphis properties in the 1980s.

Attorneys for the club and the museum said any problems with the arrangement would be between Union Group and Wachtel separate from any lawsuit, which they contend should be dismissed the day after Wachtel pays the earnest money.

Lynn Heathcott, president of the club, which is in the process of phasing itself out, expressed support for the outcome in which the mansion is still standing. But she said she has concerns about the impact of the delay.

“We’re very hopeful. But we mainly want to see the Children’s Museum have access to their funds,” she said. “We did what we felt was a good thing in giving up our building. The money went to a very good cause. We want it to be over and everyone to move forward.”

Evans indicated the next hearing might be where the case ends, even if the dispute doesn’t.

“The way I see it, the court is not inclined to take any action on anything before Oct. 16,” he said. “On the 16th, whether there is a closing or earnest money or not, the lawsuit ought to be dismissed or the Union Group be allowed to go forth with the demolition.”

Mulroy indicated that if the deal falls through, he and Brewer will be pursuing the appeal they began before the mediation efforts began, aimed at the alternative buyer and use for the property. The appeal would be of Evans’ September ruling that upheld the sale to Union Group and the demolition.